Our government has just released bankruptcy statistics indicating that the number of people who filed for personal bankruptcy in North York has decreased since this time last year.  Here is what we are looking at: 

During the first six months of 2010, 943 people in North York claimed bankruptcy.  In addition, 1,042 filed a consumer proposal.  This totals 1,985 individuals who made use of our bankruptcy laws between January and June of this year.  If we use these numbers to project the remainder of this calendar year, 3,970 people will have filed a bankruptcy or proposal in North York during 2010.  How does this compare to previous years? 

In 2009, there were 2,388 bankruptcies filed in North York, and another 1,663 proposals, for a total of 4,051.  This would mean we could be looking at a modest 2% drop in filings in North York.  This number compares to a 13% provincial wide projected decrease in insolvencies.   

On the whole, a reduction in the number of personal bankruptcy filings is good news for the economy.  This would lead us to believe that more people are working and better able to manage their debt loads. 

What’s ahead for the balance of 2010?

I think that bankruptcy rates will continue to decline in North York for the rest of this year.  We have stable interest rates and unemployment numbers, so no big changes are expected.  Things to watch out for are an increase in interest rates, or the impact of the new HST on consumer spending. 

One more important point to reflect on:  the good news is that more and more people in North York are choosing to file a consumer proposal as an alternative to bankruptcy.  In 2009, 41% of filings in North York were proposals (the rest filed bankruptcy).  This year, that percentage has increased to 52%.  That’s a big jump.  And it’s a good sign, as more people are choosing to negotiate a settlement with their creditors than file for bankruptcy.

If you would like some more information about filing a consumer proposal in North York as an alternative to claiming bankruptcy, call me at 310-PLAN or email me today to arrange a no charge initial consultation.

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Question: Once it is off my Credit Report, will the individual banks that were involved in the consumer proposal lend me money again in the future? Would I have to repay them back what I still owed to be back “in their good books”? Would the answer be any different if I filed bankruptcy in Canada?

Answer: Once you have completed your consumer proposal, you are free to apply for new credit. It will be up to the individual banks to decide whether or not they will lend you money in the future.

You are correct that one factor they will consider will be the fact that they may not have been repaid in full in your consumer proposal. However, they will also consider other factors, such as your current income, and whether or not you have taken steps to repair and rebuild your credit after bankruptcy.

Your goal should be to pay off your consumer proposal as quickly as possible, and then begin saving money and take steps to re-establish credit.

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Question: my husband and i have our personal credit in debt, up to 71K due to a business star up, we’re not trying to get on our feet but our debt just seems to be getting all of our funds and we can’t make payments on time. we’re likely to have $ 300 only after our apt lease, utilities and living essentials, such as gas and food, we own our car. can you tell me what are my options consumer proposal or bankruptcy,how can i pay back, do they reduce my debt fee? Thanks

Answer: In a consumer proposal, a settlement is reached with your creditors. For example, in a proposal you may offer to pay $300 per month for 5 years, or $18,000 in total. If the creditors accept, and you make the payments, the remainder of your debt is eliminated.

If you can’t afford a proposal, or if the creditors don’t accept the offer, the other alternative is personal bankruptcy. The cost of bankruptcy depends on your family income, the size of your family, and certain expenses.

Each situation is different, so we recommend that you contact a Toronto bankruptcy and proposal trustee to review your specific options.

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Question: I am currently work for a bank, if i file a consumer proposal and R7 will be on my record, will my employer fire me for this?

Answer: Over the years we have assisted many residents of Toronto who work for a bank file a consumer proposal. Unless you have a specific clause in your employment agreement preventing you from filing a consumer proposal, it would be very unusual for an employer to fire you for filing a consumer proposal. In most cases your employer will be pleased that you are finally dealing with your debt issues.

However, if you are worried about it, you should talk to someone in your Human Resources department first to determine whether or not a proposal would have any impact on your job.

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Here’s an e-mailed question I just received: Is your score lowered by going for credit counselling?

The answer depends on your credit score before you go for credit counselling. If you already have a bad score because you have defaulted on payments, your score will probably be no worse for attending credit counselling. According to Equifax, credit counselling will remain on your credit report for three years after your program is completed.

While credit counselling is the correct option for many, a consumer proposal is often a better option. It has the same impact on your credit report, and in most cases we can work out a plan to repay less than the full amount of your debt, allowing you to get out of debt quicker.

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Question: Can a person who recently filed consumer proposal or bankruptcy in Toronto travel out of country on his passport or travel documents like USA on business trips?

Answer: Yes. The filing of a consumer proposal or a personal bankruptcy does not prevent you from being able to travel outside of Canada.

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The number of consumer proposals and bankruptcies filed in Toronto increased by 6% in the first six months of 2007, according to statistics just released by the Office of the Superintendent of Bankruptcy. Toronto fared better than the rest of Ontario, where personal insolvency filings increased by 9%.

Most surprising is the increase in consumer proposals, which are fast becoming the leading alternative to bankruptcy in Toronto. Consumer proposals increased by 22% across the GTA. In the first six months of last year 2,275 residents of Toronto filed a consumer proposal. In the first six months of this year that number has increased to 2,768.

A consumer proposal is a legally binding deal we negotiate with your creditors. Instead of going filing for bankruptcy, you make payments over a period of time (no more than five years), usually for less than the full amount you owe. You avoid bankruptcy, and make one monthly payment, and the creditors get more money than if you went bankrupt, so everyone wins.

If you would like more information about consumer proposals or bankruptcy, call our Toronto team at 310-PLAN or E-mail us to arrange a free initial consultation. There is help available, so give us a call, and let’s get started.

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